TMI Blog2021 (4) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... ter of DLF Phase IV Commercial Developers Ltd. Ors. [ 2019 (8) TMI 829 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI ] dispensed with the meetings of the Creditors and shareholders. However, the facts of the DLF matter are little different i.e. in the DLF matter the written consent was obtained by way of an Affidavit . This Tribunal allowed the Appeal by setting aside the order of the Tribunal where the Learned Tribunal rejected the approval seeking the dispensation of the meetings of creditors and shareholders. In the present case the Learned Tribunal ought to have dispensed with the meetings of the Equity shareholders and Creditors of the Appellant Company. The only objection taken by the Learned NCLT that no written consent by way of an Affidavit of the Shareholders and Creditors, were filed. The meetings of the Equity shareholder, Secured and Unsecured Creditors of the Appellant Company is dispensed with - matter is remanded back to the NCLT for further Consideration - appeal allowed. - Company Appeal (AT) No. 19 of 2021 - - - Dated:- 6-4-2021 - [ Justice Jarat Kumar Jain ] Member ( Judicial ) And [ Kanthi Narahari ] Member ( Technical ) For the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the proposed scheme of amalgamation. 8. Learned Counsel further submitted that the rationale of the Scheme is as follows: The nature of business carried on by the Amalgamating Company is complimentary to the business carried on by the Amalgamated Company, a) The Amalgamating Company has the business of processing fly ash into Pozzo-crete which will now be extended to the Amalgamated Company. b) Simplify management Structure leading to better administration and reduction in cost from more focused operational efforts, simplification of business process and elimination of duplication and rationalisation of administrative functions and reduction in multiplicity of legal and regulatory compliances. c) Pooling of resources (including manpower, management and administration and marketing resources) of the aforesaid companies resulting in, synergies of operations and optimisation of logistics, resulting in more productive utilisation of said resources, savings in cost and operational efficiencies. d) Strengthening financial position and increased leverage capacity of the merged entity. e) In view of the aforesaid, the Board of Directors (as hereinafte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sferor Company reflected in the Appellant Company s Balance Sheet. The net worth of the Appellant Company is ₹ 22,714,00,00,000/-. While so net worth of the transferor company is ₹ 2,07,53,830/-. 14. The Learned Counsel submitted that the net worth of the Appellant Company is highly positive and there are no Secured Creditors in the Appellant Company. However, there are Unsecured Creditors in the Appellant Company which are only Trade Creditors for an amount of ₹ 1,108 Crores as on 31.03.2020. 15. Learned Counsel submitted that Transferor Company being a wholly owned subsidiary of the Appellant, it need not issue any shares to the shareholders. Hence, the scheme would not result in any dilution in the shareholding of the Appellant Company. Learned Counsel further submitted that there is no reorganisation of the share capital of the Transferee Company that since 100% share capital of the Transferor Company is held by the Appellant and there is no reorganisation in either its shareholding or its debt position. Because shareholders of the holding Company are nothing but the shareholders of the Subsidiary Company. The Appellant being the Transferee Company, its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Appellant Company i.e. Transferor Company has large no. of shareholders and creditors and none of them have filed their consent and no objection towards the scheme of merger/amalgamation as such due to want of such written consent by way of Affidavit from the shareholder/Creditor and hold that prayer for dispensation of the meeting cannot be allowed. 23. We have perused the scheme of merger approved by the Board of Directors of the Transferor and Transferee Company. The scheme apart from the other clause envisage that, the under taking and business of the amalgamating Company i.e. transferor Company as a going concern. It is important to note that clause 3.15.2 of the scheme envisages that all debts, liabilities, borrowing will be undertaken by the transferee i.e. Appellant Company. 24. As stated supra it is an admitted fact that the Transferor Company(amalgamating Company) is 100% Subsidiary of the amalgamated Company /transferee Company and there is no change in the structure of the transferor Company. Further, clause 6.1.2 of the scheme under the heading transfer and vesting of undertaking, it is clear that all the liabilities of the amalgamating Company immediate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approval of it as long as Company does not sell, lease or dispose of its undertakings, does not propose to invest in Securities trust. 29. From the perusal of the pleadings it is amply clear that the Appellant Company is a 100% holding of its Subsidiary i.e. the transferor Company. Therefore, there is no issuance of any new shares, there is no reorganisation of share capital of the Appellant Company and no arrangement wherein shareholders have to compromise with creditors of the Transferor Company. Further, we have also seen that the net worth of the Appellant Company is highly positive in compare to the net worth of the Transferor Company. 30. We have perused the Judgment relied upon by the Learned Counsel for the Appellant in the matter of Mahaamba Investments Ltd. vs. IDI Ltd. . The Hon ble High Court of Bombay held at paragraph 5 6 as under: 5. In the present case, having regard to the relevant clauses of the proposed scheme and particularly the provision whereby no new shares are sought to be issued to the members of the transferor company by the transferee company, the scheme will not affect the members of the transferee company. The creditors of the transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Direction and Company Scheme Petition under Section 391 and 394 of the Companies Act, 1956 by Eurokids International Private Limited, the Transferee Company is dispensed with. 33. The Learned Counsel for the Appellant submitted that the Bench which passed the impugned order dispensed with the meeting of the shareholders and creditors in CA (CAA) No.96 of 2019 dated 09.09.2019 in the matter of Vodafone Idea Ltd. The Learned Counsel submitted that the facts of that case are similar to the facts of the present case. In the above order the Learned Tribunal by considering the facts and Citations held that the meetings of Secured and Unsecured creditors of the Applicant transferee company has been dispensed with. He submitted that the quorum which passed the order in Vodafone Idea Ltd. is the same quorum which passed the impugned order. It is apparent that the facts are similar in both the cases but the Learned NCLT Ahmedabad Bench did not follow its own order passed in Vodafone Idea Ltd. Supra in the present case is illegal. The Learned Counsel for the Appellant submitted that it is contrary to the Principles of Judicial Discipline. For better appreciation we reproduce t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the Appellant relied upon the Judgment of this Tribunal to show that Judicial precedents need to be followed as observed in the matter of DLF Phase IV Commercial Developers Limited Ors. in CA (AT) No. 180 of 2019. This Tribunal while dealing with the merits of the case held as under: 8. Keeping in view the foregoing and all relevant considerations as also the settled law on the subject, the impugned order falling within the purview of per incuriam cannot be supported. The Tribunal should have applied its mind in the light of judicial precedents brought to its notice by way of an affidavit, and in the event of the views expressed by the Coordinate or Larger Benches being squarely applicable, followed the same. Such application of mind being abysmally absent, the impugned order is unsustainable and has to be set aside to the extent it relates to directions for convening of the meetings of Unsecured Creditors of Appellant No. 4 and the meetings of the Equity Shareholders, Secured and Unsecured Creditors of Appellant No.5. 36. We are of the view that the NCLT Ahmedabad Bench ought to have taken into consideration the order of the coordinate Bench and also the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur judicial system. This Court has laid down time and again that precedent law must be followed by all concerned; deviation from the same should be only on a procedure known to law. A subordinate court is bound by the enunciation of law made by the superior courts. A coordinate Bench of a court cannot pronounce judgment contrary to declaration of law made by another Bench. It can only refer it to a larger Bench if it disagrees with the earlier pronouncement. We respectfully concur with these observations and are confident that all the courts and various tribunals in the country shall follow these salutary observations in letter and spirit. 37. From the above Judgment of the Hon ble High Court of Bombay in the matter of Mahaamba Investments Ltd. vs IDI Ltd. , whereby it is clear that an Application filed by the Transferor Company or Transferee Company, a separate Application is not necessary by the Transferee/Transferor Company. Further, this Tribunal in the matter of DLF Phase IV Commercial Developers Ltd. Ors. dispensed with the meetings of the Creditors and shareholders. However, the facts of the DLF matter are little different i.e. in the DLF matter the written ..... X X X X Extracts X X X X X X X X Extracts X X X X
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